Interest on fixed rate bonds

Mumto2

If you have annual interest on a fixed rate bond, it is paid on maturity. Is this taxable just in the tax year of receipt, or do you need to proportion it over the life of the bond?

Thanks

dizzie

Hi Mumto2,

My understanding is that the interest is taxable in the year that you actually get paid it, so if it is not added until maturity, then that is when you pay the tax on it.

Mikeyorks

The relevant date for tax purposes is when the interest is paid. In the case of fixed term deposits ('Bonds') this can be monthly ..... or annually (for some > 1 year terms) .... or on maturity.

It's why Equity Bonds - which can typically span 5 years - need to be have this element considered. As most are IT as opposed to CGT ...... so all the tax is appropriate to the year of maturity.